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The entire regulatory process needs public input to help guide how rules are designed and implemented. This means businesses, organizations and individuals like yourself should take part in the process through public comments. Your concerns and input could help you save money.

Congress is currently considering the Regulatory Accountability Act, which, if signed into law, will revise federal rulemaking procedures and require agencies to consider a variety of factors during the regulatory process. Some view this bill as an important step towards lightening the burden of excessive regulation on citizens and businesses. Others see it as a significant threat. For example, the Coalition for Sensible Safeguards has said the act would cripple the process for issuing and enforcing rules to ensure we have clean air and water, safe food and consumer products, fair wages and safe workplaces, and many other protections. The Consumers Union tweeted that the act “would rig the system, put corporate profits ahead of consumers,” while the Union of Concerned Scientists said the act “subverts science.”

These are intriguing comments because given the best information available, most economists I know already strive to bring science into the rulemaking arena, especially when evaluating benefits. My goal as a regulatory economist, both within the federal government and in the private sector, has been to objectively identify potential costs and benefits of any proposed or final rule and to then let policymakers chose among appropriate regulatory actions. As such, I do not see how the act’s detractors could be against objective economic analyses—unless of course their criticisms are more about politics than economics. Regardless, comments from the private sector on costs and benefits will ultimately result in a better rule and money saved.

When I was working at the Department of Homeland Security (DHS), I sometimes encountered cases where I shared objective but unpopular results that related to the costs and benefits of a given rule. In instances where my analysis indicated a rule should not be implemented, I had people ask me why I was against greater homeland security. For example, when traveling through an airport, what if you were screened by the Transportation Security Administration at a checkpoint, then 10 feet after you were first screened, you were screened again in an identical manner, and then in the airport concourse, you were screened a third time. If one’s view is that more screening equals greater security, then this hypothetical circumstance might seem like a great idea. Yet, from an economic standpoint, it makes no sense and may not yield greater security. And as a tangential impact, people may begin to choose alternative, more dangerous modes of transportation (such as driving) to avoid excessive, time-consuming airport screening.

I think back to my time working at the Occupational Safety and Health Administration (OSHA), which is charged with protecting the heath and safety of American workers. Many of the employees at OSHA were advocates of the mission, regardless of the cost. In many rulemaking meetings, I had to staunchly defend my unpopular economic analyses because my results were not always accepted. In many cases, I needed help from the American public. That is, I turned to cost/benefit information in the form of public comments, and I contacted the commenters to address their specific concerns. This is how the regulatory process should work, and the Regulatory Accountability Act moves us more fully in that direction through better management.

Yet, the entire regulatory process (even with the act) needs public input to help guide how rules are designed and implemented. This means businesses; organizations and individuals should take part in the process through public comments with data that supports their position.

Making Informed Public Comments

The Federal Register is the official U.S. government daily publication for final rules and proposed rules. In it, the public can find notices, Executive Orders, and presidential documents. Made available by the Office of the Federal Register within the National Archives and Records Administration, DHS final and proposed rules must contain several sections of interest when commenting on costs and benefits:

  1. Executive Orders 13563 and 12866 direct agencies to assess the costs/benefits of available regulatory alternatives. They also require agencies to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.
  2. The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) require agencies to prepare a Regulatory Flexibility Analysis that describes the effect of a proposed rule on small entities.
  3. The last section of consideration addresses the provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320. This part of the rulemaking is important when the proposed or final rule triggers new or revised recordkeeping or reporting requirements.

These sections of DHS final and proposed rules are necessary to understand if you want to comment on how to save you or your company money while achieving certain national goals. Here are some points that will help you make better informed comments.

Detailing Tangential Benefits

Some commenters need guidance when it comes to their analysis of the benefits. Without it, their comments are generally not useful to DHS and other agencies. Many times, cost-benefit analyses lump together all benefits (including tangential benefits), failing to detail if and how a proposed rule’s expected benefits exceed claimed costs not from the primary benefits but a tangential impact that reduces the likelihood of other events. Without detailing the tangential benefits, the proposed rule might fail DHS’s cost-benefit review. If tangential or secondary benefits (not attributable to the rule itself) can be reduced, then DHS should issue proposed rules to lower them with their own comment periods and cost-benefit analysis.

For example, let’s assume DHS is proposing a rule to provide stringent supply chain measures at U.S. spice manufacturing plants. Many food items sold in the United States have some spices added, and if a terrorist were to attack the U.S. food supply chain, introducing a substance at a spice manufacturing plant could have an outsized effect. Yet, the quantifiable benefits in this example are assumed to be low. To ensure that the rule is cost beneficial, DHS might suggest that the added security precautions would reduce employee pilferage, and if that were the case, the proposed rule would be cost beneficial. One lesson for the public commenter in crafting their input is to suggest that the DHS rules are not designed (as in this example) to reduce employee pilferage, as there are numerous rules of this kind already and the benefits have already been counted.

Double Counting Benefits

The problem associated with double counting of benefits becomes readily apparent when the benefits of past rulemaking and future rulemakings are lumped together. I have witnessed this at a number of regulatory agencies; they occur somewhat frequently. If a previous rulemaking is designed to reduce the likelihood of a terrorist event, then it should not use the new rulemaking to count the benefits again, as the benefits will have already been realized. In other words, agencies should not be using the same set of benefits to justify multiple rules.

For example, the Federal Aviation Administration (FAA) acknowledges that both TSA and the FAA administer hazardous materials regulations (HMR). The FAA states that passengers violating HMR can be fined monetarily and/or with imprisonment. TSA also has rules on prohibited items that pose a security threat, and the FAA admits that they sometimes overlap (e.g., the “3-1-1” rule on liquids, gels and aerosols). The point is that both regulatory agencies are attempting to minimize or eliminate hazardous materials from being transported on aircraft, and regulatory agencies in the future need to make sure that the same benefits are not being used to justify different regulations. For the public commenter, this means that you should carefully look at the benefits section of each economic analysis and investigate the baseline the agency is using to measure benefits. For example, have the benefits been used in a previous rulemaking? If so, then the same previous accidents or incidents should be excluded from the calculations in this rulemaking.

Consequences of Terrorist Events

The consequences of a terrorist event cannot be underestimated, but at the same time, we cannot assume all terrorist attacks are equally harmful. Let’s say, for example, a terrorist event causes the release of excess particulate matter, but one event occurs in a large city and another event occurs in a much smaller, less urban area. Counting benefits such as the reduction of particulate matter in an area that already has low levels is not much of a benefit compared to an area with excessive particulates. So if readers believe that a proposed rule might be burdensome to them, resulting in the possibility of unfounded benefits, then it is important to understand the methodology that the agency used to calculate the economic benefits. When benefits cannot be justified, even in the broadest of situations, it is important for the public to provide relevant comments on the issue.

Remember that since the agency is writing the rule, like a person initiating a contract in the business world, the contract writer has the advantage in the beginning. But the rulemaking process only favors an agency’s view if other stakeholders (such as the public) do not participate. Help create more objective rules by commenting extensively with factual data.

Gary S. Becker is the Chief Economist for Catalyst Partners, LLC. In this role, Becker offers economic analyses to clients on matters relating to homeland security, including the cost impact of proposed and final rulemakings. He offers advice on how to save money while achieving desired security benefits. Read More